Having begun with no experience in hotel management, Julia Hands has steadily grown Hand Picked Hotels over the past 10 years. The chairman and chief executive explains her philosophy and business plan to Janet Harmer
You have been running Hand Picked Hotels for 10 years. Can you assess the past decade for the company? We are very pleased with the physical product, having invested considerably in upgrading and refurbishing the hotels within the group. There has been some change with the make-up of the group. We sold two hotels soon after I took over running the company, as they didn't fit into our portfolio. Then in early 2008, we added three hotels - Audleys Wood Basingstoke], Hendon Hall [North London] and New Hall [Sutton Coldfield]. The past three years have been very challenging, but we are coming through it now, although it has taken longer than we envisaged.
How do you stand out from your competitors? I think we are unique in that there is no other group of privately owned and run hotels of this size and quality in the UK.
Sixteen of the hotels have four AA stars and six have red AA stars. Fifteen of the hotels hold two AA rosettes, with one - Norton House in Edinburgh - holding three rosettes.
We have set a high standard for ourselves and these accolades are evidence of that. We have never wanted to create a chain - all of our properties are delightfully different and we wanted to celebrate that, not brand stamp them. We do however expect the same high level of service from each of them.
How did the recession impact upon the business? Our conference business dropped substantially. Prior to 2008 it accounted for around 25% of our total business. While it has began to grow again - conferences currently account for 15% of our turnover - the rest of the business is split between corporate (30%), leisure (30%) and weddings (25%).
Our average 24-hour corporate rate across the group is £180, which is down from the £240 rate we achieved in 2007. However, we were not prepared to cut rates further as we needed to protect them for the long term.
Over the past couple of years it has been important to add value to what our customers were paying - so that might have meant free wine or canapés, or maybe waiving a room hire charge where appropriate.
It has been very important not to cut quality. Having spent seven years building up the brand with an emphasis on service and a certain standard of product, we did not want to lose that in a few bad years. As a result we've avoided redundancies, although we have held back on hiring staff.
Over the past couple of years you and your husband [Guy Hands, boss of private equity company Terra Firma] ploughed £23m of your own cash into Hand Picked Hotels. Why was this necessary? We wanted to reduce the company's debt down to a more comfortable £99m, to give ourselves a firm financial footing. There was no pressure from the banks to do this, but we didn't want to breach any covenants. We are now quite happy in moving the company forward with the current debt.
At a time when so many hotel companies are moving away from being both asset owner and operator, you have chosen to remain as both. What are the benefits of doing so? Quite simply we have total control of the business; we can do exactly what we want with each property. And we have no intention of selling any hotels in the future to fund expansion - that wouldn't be the way for us to go.
You mention expansion - what are your plans for growing Hand Picked Hotels? We would like to grow the group to 20 hotels, beyond that number we would have to consider changing the current structure of the company and expanding the head office team beyond the 25 we have in Sevenoaks. But I would never say never to growing larger.
Ideally we are looking for properties with 60 to 70 bedrooms. However we do have some smaller properties such as Brandshatch Place [38 bedrooms] in Kent, that has a spa which helps to increase turnover. But, generally we found that hotels with fewer than 60 or so rooms are more difficult as a revenue earner.
In terms of location, we currently have nothing along the M4 corridor or in Hertfordshire or Buckinghamshire. We would also like something close to Glasgow.
How will expansion be financed? It will be a mix of equity and bank debt. The bank - it was HBOS, now Lloyds - is very supportive of our plans to expand the portfolio.
Would you consider buying any of the 26 Von Essen hotels currently up for sale? We've looked at some - but most of them are significantly smaller than we are looking for or are regarded as trophy properties. We would rather pay a good market price than a trophy price.
Of the larger hotels, Cliveden [41 bedrooms] has a very high price tag [£35m] and the Royal Crescent at Bath [45 bedrooms] is a beautiful property, but it's not a perfect fit for our group, being in the city.
However, we do have one hotel in an urban location - Hendon Hall in North London, once the country home of David Garrick [actor and manager of the Drury Lane Theatre] when it was surrounded by fields. It works very well for us, probably because it is set within extensive grounds and has a country house feel.
What do you think went wrong with Von Essen? I don't know the ins and outs of how the business was run, but I do think it is very challenging to run small properties profitably.
In the past you have voiced your surprise at the lack of women in top jobs within hotels. Have you been able to redress the balance within Hand Picked Hotels? As well as Sue Bates, who is our general manager at Woodlands Park in Cobham, Surrey; and Lucy Hyder, the head chef at Buxted Park in East Sussex; we have a number of female heads of department such as the heads of purchasing, training and HR. The finance director, Mandy Newton, is on the board, and our deputy operations director is a woman.
Although it is very satisfying, the hotel business is also very demanding 24/7, which can make it difficult for some women with family commitments. We do offer job shares and part-time working where possible, but there are some positions, such as general manager, which it would be very difficult to be flexible about.
You have a good staff retention rate of 60% - how have you achieved this? One of our chefs who returned to us for a second stint said that one of the best things he did was to leave. And that is fairly typical; a large number of staff come back to us as they like what we offer them. We encourage internal promotions, both within a hotel and between properties. Lucy, who I mentioned earlier, was promoted from sous to head chef.
Staff are also given a lot of autonomy and empowerment in each hotel, with general managers encouraged to take control of their properties by having access to all the figures for their property as well as the group as a whole.
Are chefs allowed creative licence too? Chefs create their own menus and hire their own staff. We have a flexible approach to purchasing. Generic items like milk, flour, wine and cleaning supplies are sourced centrally as this gets us the best prices.
However, we actively encourage our chefs to purchase local produce such as meat, fish, cheese, fruit and vegetables from small, specialist producers, reflecting the heritage of each of the hotels. For instance, Crathorne Hall hotel on the edge of the North Yorkshire moors, uses black pudding from Thirsk, Yorkshire asparagus, beef from Hurworth Moor and Anna's Happy Trotter free-range pork.
What do you regard as your greatest achievement at Hand Picked Hotels? Awards and accolades are always welcome and do bring satisfaction, but I think my greatest achievement has been the creation and nurturing of the culture at Hand Picked Hotels. Our corporate values are very strong and our training programmes like Being Hand Picked enable newcomers to quickly assimilate themselves into our culture. When I see the pride with which our people do their jobs, I feel immensely proud of them and the company.
Hand Picked Hotels
Chairman and chief executive Julia Hands
Operations director Douglas Waddell
Commercial director Ken Arkley
Finance director Mandy Newton
Annual turnover (to 25 November 2010) £59.2m
History Julia Hands created Hand Picked Hotels in 2001 from a group of hotels she purchased with her husband, Guy Hands, from the Virgin and Arcadian portfolios two years earlier.
Initially the hotels were managed by Macdonald Hotels, then in 2001 the agreement was terminated "by mutual agreement".
The group continued to trade under the Arcadian name until the Hand Picked Hotels brand was launched in October 2003. With Hands at the helm, the brand has been built around a group of former private country houses, mostly dating from the 18th and 19th centuries, with an emphasis on informality and a relaxed, unstuffy atmosphere.
More than £94m has been invested in restoring the properties over the past 10 years, with the creation of spas at eight of the hotels. Hand Picked Hotels was named AA Hotel Group of the Year 2004-5 and in 2007 Hands was awarded an MBE for services to the hospitality industry.
E-mail your comments to Janet Harmer here.
If you have something to say on this story or anything else join the debate at Table Talk - Caterer's new networking forum. Go to www.caterersearch.com/tabletalk
Looking for a new job? Find your next job here with Caterersearch.com jobs